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Talking Retirement With Young Employees

Workers under the age of 35 historically have had the lowest level of participation in retirement plans. There are likely multiple reasons for this, but the lack of engagement can be attributed in part to the fact that young workers are not getting the right messages the right way. Getting through to younger employees about saving for retirement means using newer channels of communication and carefully tailoring the messages to the demographic.

Technology has reshaped the way younger generations communicate. Plan sponsors need to consider using modern communications channels to reach this group by creating blogs, social media forums, and email, and utilizing Twitter and similar outlets. There even logic in communicating plan information via text message.

Younger, tech-savvy participants generally want to study plan information on their own time so providing easy access to online, mobile-optimized plan data is important. It’s wise to consider offering participants interactive retirement savings calculators and the ability to compare their investment options based on investment type, performance, fees and more.

But the platform only delivers the message; what’s communicated over that platform important as well. It’s important to craft the message in ways that appeal to a younger employee. For younger workers, retirement security lacks the urgency older workers feel, researchers wrote in a brief for the Center for Retirement Research at Boston College. [Younger] people tend to distance themselves from it and think about it abstractly.

Getting younger employees to prioritize saving for retirement often involves framing the issue in current terms. For instance, instead of telling younger employees the total amount of money they’ll need for retirement, show them how little a portion of their paycheck they need to use to reach their retirement goals. This puts the conversation in the here and now.

Emphasize other compelling here and now benefits to saving such as employer matching contributions and tax deferral.

Many experts say the biggest hurdle for this group is inertia. To battle that, it’s recommended that plan sponsors set up automatic enrollment for their employees. Very few of those who are auto enrolled opt-out, making it a very effective tool for engagement.

In addition to automatic enrollment, consider plans with features like automatic rebalancing and automatic deferral increases. In a similar vein, including target-date funds (TDFs) for employees to choose from can also be helpful. These investment options provide fully diversified investment portfolios based on the employee’s targeted retirement dates.